Netflix To Stream Movies Over Microsoft's Xbox Live ServiceNetflix To Stream Movies Over Microsoft's Xbox Live Service

Microsoft and Netflix have unveiled a partnership under which Netflix will stream movies directly to consumers through Microsoft's Internet-based Xbox Live service.

Under the deal, customers who have an Xbox 360 console attached to their TVs and who subscribe to Microsoft's Xbox Live Gold service, and who are also Netflix subscribers, can download Netflix movies at no additional cost.

The service will launch in the fall and feature more than 10,000 movies and TV shows available for immediate viewing, Netflix and Microsoft said in a joint statement Monday.

"Watching movies at home will never be the same," said John Schappert, Microsoft's VP for interactive entertainment, in a statement.

Launch of the service could hurt sales of Sony's PlayStation 3 console, which features a built-in DVD player that can play discs encoded in Sony's high definition Blu-ray format. Netflix and Microsoft did not specify whether their service would include HD content, but Microsoft already makes numerous HD titles available through Xbox Live.

Increasingly, Microsoft is positioning the Xbox not just as a games console, but as a platform for launching music and video content.

Microsoft on Sunday introduced a new addition to its line of Xbox 360 video game consoles -- a model that features 60 GB of storage and a $349 price tag.

The 60-GB version of the Xbox 360 will hit stores in the U.S. and Canada starting in early August. It replaces a 20-GB version, which also sold for $349. Microsoft said it would continue to sell the 20-GB version while supplies last at a reduced price of $299.

Microsoft is looking to maintain recent Xbox sales' momentum in the face of stiff competition from the PlayStation 3 and Nintendo's Wii unit. The 40-GB PlayStation 3 sells for $399, while the Nintendo Wii sells for $250.

In its most recent quarter, Microsoft reported that Xbox 360 total console sales surpassed 19 million during the period, up 74% from the previous year.

Recent releases of hot-selling game titles, including Halo 3 and Grand Theft Auto IV, have helped spur Xbox 360 sales. Halo 3, an Xbox 360 exclusive, smashed numerous game industry sales records when it debuted late last year -- including most launch day sales.

Among the upcoming titles that Microsoft is counting on to further grow Xbox 360 sales is Rock Band 2, which is slated for release in September. Reports have also suggested that Microsoft is developing a Wii-style motion controller for the Xbox. Microsoft has not confirmed those reports.